The Reserve Bank of India (RBI) will closely track data from domestic and external sources, governor Shaktikanta Das said on August 8, adding it is premature to talk about a recession in the United States.
Global markets tanked on August 5 following lower-than-expected job figures from the US, which triggered fears of a slowdown in the world’s largest economy.
“I think it would be sort of premature to talk about recession in the US. From the point of view of RBI, we will be watchful of all incoming data from domestic and external sources and we will deal with all emerging situations,” Das said during the post policy press conference.
Despite the unemployment data, US’ overall growth remains good. The second quarter numbers were higher than the first quarter at 2.8 percent.
“So far unemployment is concerned this is one month data, now based on one month data, you cannot rush to a conclusion about possibility of slowdown, possibility of recession in the largest economy in the world,” Das said.
JPMorgan economists led by Bruce Kasman wrote in a note to clients on August 7 that they see a 35 percent chance of the US economy tipping into a recession by the end of the year, up from 25 percent at the start of last month.
US news “hints at a sharper-than-expected weakening in labor demand and early signs of labor shedding,” they said.
The team sees the odds of a recession by the second half of 2025 at 45 percent.
Earlier in the day, the RBI’s Monetary Policy Committee (MPC) held the benchmark repo rate at 6.5 percent for a ninth time.
It also left the stance unchanged, staying focussed on “withdrawal of accommodation”. The decisions were taken with a majority of 4:2 by the six-member rate-setting panel.
The other rates namely, standing deposit facility (SDF) rate also remained unchanged at 6.25 percent and marginal standing facility at 6.7 percent. The bank rate was also maintained at 6.7 percent.
“There is a good amount of convergence in RBI policy and market expectation,” Das said.
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